Negotiations to resume over works on units 3 and 4 of Cernavoda n-plant

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Nuclearelectrica state-owned energy generator is expected this week to resume negotiations with six investors interested in the finalisation of works on unit 3 and unit 4 of the Cernavoda nuclear-power plant.
Nuclearelectrica Director General Teodor Chirica has recently told daily Business Standard that irrespective of the outcome of this year's general election, March 2009 will be the likely deadline for the establishment of the project company for the works on the plant.
"We have not resumed talks so far with the officials of the six companies because the Romanian Government's decision 691/2008, under which our holding in the project was increased,  has not been published yet in the Official Gazette," said Chirica.
 
He added that together with the Deloitte consultant Nuclearelectrica is now working on an action plan for the period immediately ahead so that within 120 days of the coming into force of Government's Decision 691, that is August 7, all the stages provided for in the document may be followed through. "We have until December to conclude an agreement with the investors, based on which the construction of units 3 and 4 will be carried out. The plan will have to be introduced to the Romanian Government and then we will start setting up the project company. I believe that, irrespective of the outcome of the general election, March 2009 is a possible deadline for the establishment of the project company," he said.
 
In April 2008, the Romanian Government announced it is intending to increase from 20% to 51% the holding of Nuclearelectrica in the company to design units 3 and 4 at the Cernavoda n-power plant that will have an installed power of 720 MW each. According to the initial strategy of the Romanian Government, none of the companies involved in the project should have held a majority stake in the company, but each of them would be distributed electricity generated by the 2 units commensurate with their holding in the company. According to the previous negotiations, CEZ of the Czech Republic, ENEL of Italy, RWE  of Germany and Electrabel of Belgium would each control 15% of the holding, while Iberdrola of Spain and ArcelorMittal steel works would have 10% stakes each.
 
"None of the six investors have so far voiced intention to pull out of the project," said Chirica. According to the initial schedule, the project company should have been set up in March 2008, so the delay would be one year. The initial deadlines for the commissioning of the two units were 2014 and 2015.Cost estimates according to the costs on international markets have increased from 2.2 billion euros to 4 billion euros. Chirica argues the market will provide the exact price when the general works contractor is selected, adding that nobody knows how much a nuclear unit would cost now.
 
At this value, Nuclearelectrica's contribution to the project would be close to 2 billion euros.Most of the funds will come from the Budget or Government-secured loans, which means that consultations have to be conducted with the European Commission as well, which in turn means the project would be some more months delayed.With a market share of 18% in Romania's domestic energy market, Nuclearelectrica, the operator of the nuclear-power plant at Cernavoda, is the second largest in the country, behind Hidroelectrica, which controls 25% of the market. Following the commissioning of the second unit, Nuclearelectrica's business surged 77% in H1, 2008 from H1, 2007, to 185.5 million euros. Its net profit stood at 19.8 million euros, up 10.6% year on year.
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